[Federal Register Volume 74, Number 48 (Friday, March 13, 2009)]
[Proposed Rules]
[Pages 10843-10849]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-5305]
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FEDERAL TRADE COMMISSION
16 CFR Part 320
RIN 3084-AA99
Disclosures for Non-Federally Insured Depository Institutions
under the Federal Deposit Insurance Corporation Improvement Act
(FDICIA)
AGENCY: Federal Trade Commission (FTC or Commission).
ACTION: Supplemental notice of proposed rulemaking; request for public
comment.
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SUMMARY: The Federal Deposit Insurance Corporation Improvement Act of
1991 (FDICIA) directs the Commission to prescribe the manner and
content of certain mandatory disclosures for depository institutions
that lack federal deposit insurance. On March 16, 2005, the Commission
published a notice of proposed rulemaking (NPRM) seeking comment on
disclosure rules for such institutions. Subsequently, Congress passed
the Financial Services Regulatory Relief Act of 2006 (FSRRA), which
amended FDICIA's requirements. To ensure that the FTC's requirements
are consistent with the FSRRA amendments, the Commission is seeking
comment on conforming changes to the proposed Rule.
DATES: Written comments must be received on or before June 5, 2009.
ADDRESSES: Interested parties are invited to submit written comments
electronically or in paper form. Comments should refer to
``Supplemental Proposed Rule for FDICIA Disclosures, Matter No.
R411014'' to facilitate the organization of comments. Please note that
comments will be placed on the public record of this proceeding--
including on the publicly accessible FTC website, at (http://www.ftc.gov/os/publiccomments.shtm) -- and therefore should not include
any sensitive or confidential information. In particular, comments
should not include any sensitive personal information, such as an
individual's Social Security Number; date of birth; driver's license
number or other state identification number, or foreign country
equivalent; passport number; financial account number; or credit or
debit card number. Comments also should not include any sensitive
health information, such as medical records or other individually
identifiable health information. In addition, comments should not
include any ``[t]rade secrets and commercial or financial information
obtained from a
[[Page 10844]]
person and privileged or confidential . . .,'' as provided in Section
6(f) of the FTC Act, 15 U.S.C. 46(f), and Commission Rule 4.10(a)(2),
16 CFR 4.10(a)(2). Comments containing material for which confidential
treatment is requested must be filed in paper form, must be clearly
labeled ``Confidential,'' and must comply with FTC Rule 4.9(c).\1\
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\1\ FTC Rule 4.2(d), 16 CFR 4.2(d). The comment must be
accompanied by an explicit request for confidential treatment,
including the factual and legal basis for the request, and must
identify the specific portions of the comment to be withheld from
the public record. The request will be granted or denied by the
Commission's General Counsel, consistent with applicable law and the
public interest. See FTC Rule 4.9(c), 16 CFR 4.9(c).
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Because paper mail addressed to the FTC is subject to delay due to
heightened security screening, please consider submitting your comments
in electronic form. Comments filed in electronic form should be
submitted by using the following weblink: (https://secure.commentworks.com/ftc-fdiciasupp) (and following the instructions
on the web-based form). To ensure that the Commission considers an
electronic comment, you must file it on the web-based form at the
weblink (https://secure.commentworks.com/ftc-fdiciasupp). If this
Notice appears at (http://www.regulations.gov/search/index.jsp), you
may also file an electronic comment through that website. The
Commission will consider all comments that regulations.gov forwards to
it. You may also visit the FTC website at http://www.ftc.gov to read
the Notice and the news release describing it.
A comment filed in paper form should include the ``Supplemental
Proposed Rule for FDICIA Disclosures, Matter No. R411014'' reference
both in the text and on the envelope, and should be mailed or delivered
to the following address: Federal Trade Commission, Office of the
Secretary, Room H-135 (Annex A), 600 Pennsylvania Avenue, N.W.,
Washington, D.C. 20580. The FTC is requesting that any comment filed in
paper form be sent by courier or overnight service, if possible,
because U.S. postal mail in the Washington area and at the Commission
is subject to delay due to heightened security precautions.
The FTC Act and other laws the Commission administers permit the
collection of public comments to consider and use in this proceeding as
appropriate. The Commission will consider all timely and responsive
public comments that it receives, whether filed in paper or electronic
form. Comments received will be available to the public on the FTC
website, to the extent practicable, at (http://www.ftc.gov/os/publiccomments.shtm). As a matter of discretion, the Commission makes
every effort to remove home contact information for individuals from
the public comments it receives before placing those comments on the
FTC website. More information, including routine uses permitted by the
Privacy Act, may be found in the FTC's privacy policy, at (http://www.ftc.gov/ftc/privacy.shtm).
FOR FURTHER INFORMATION CONTACT: Hampton Newsome, (202) 326-2889,
Attorney, Division of Enforcement, Bureau of Consumer Protection,
Federal Trade Commission, 600 Pennsylvania Avenue, N.W., Washington,
D.C. 20580.
SUPPLEMENTARY INFORMATION:
I. Background
In 1991, as part of the Federal Deposit Insurance Corporation
Improvement Act (FDICIA), Congress directed the Commission to prescribe
certain disclosures for depository institutions lacking federal deposit
insurance. Although FDICIA was enacted in 1991, Congress prohibited the
FTC from spending resources on FDICIA's disclosure requirements until
2003. After Congress lifted that ban, the Commission published proposed
disclosures consistent with FDICIA's statutory directives (70 FR 12823
(March 16, 2005)). In response, many commenters raised concerns with
the proposal.\2\ Thereafter, Congress passed the Financial Services
Regulatory Relief Act of 2006 (FSRRA) (Pub. L. 109-351) amending
FDICIA. The FSRRA amendments addressed almost all of the concerns
raised by commenters with the FTC's proposed Rule.
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\2\ See (http://www.ftc.gov/os/comments/FDICIA/index.shtm).
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While the FSRRA amendments contained some modifications to the
requirements, they did not alter significantly the basic statutory
obligations for affected institutions. It is important to note that
FDICIA's disclosure requirements apply regardless of the status of
FTC's regulations in this area. Accordingly, institutions lacking
federal deposit insurance must comply with the law's disclosure
requirements now.
To conform with the FSRRA amendments, the Commission now publishes
revised proposed Rule provisions. Section II of this Notice describes
these proposed provisions in detail. Before addressing the FTC's
proposed Rule provisions, the following discussion provides background
about federal deposit insurance, institutions that lack such insurance,
statutory disclosure requirements for such institutions, the FTC's role
in this area, and the changes to the law effected by the FSRRA
amendments.
Under existing law, all federally-chartered and most state-
chartered depository institutions must have federal deposit insurance.
Federal deposit insurance funds currently guarantee all deposits at
federally insured institutions up to and including $250,000 per
depositor.\3\ Federally insured banks and credit unions must display
signs disclosing this guarantee at each station or window where insured
deposits are normally received in the depository institution's
principal place of business and in all its branches.\4\
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\3\ On October 3, 2008, the enactment of the Emergency Economic
Stabilization Act of 2008 temporarily raised the basic limit on
federal deposit insurance coverage from $100,000 to $250,000 per
depositor. The legislation provides that the basic deposit insurance
limit will return to $100,000 after December 31, 2009.
\4\ See 12 CFR Part 328 and 12 CFR Part 740.
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Although the vast majority of depository institutions have federal
deposit insurance, there are some exceptions. For example, the Puerto
Rican government provides deposit insurance for non-federal credit
unions located in Puerto Rico. In addition, approximately 200 state-
chartered credit unions in approximately eight states do not have
federal deposit insurance, and seek to protect their customers through
private deposit insurance.\5\
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\5\ According to the U.S. Government Accountability Office
(GAO), eight states have credit unions that purchase private deposit
insurance in lieu of federal insurance. Other states either require
federal insurance or allow private insurance but do not have any
privately insured credit unions. GAO also identified two
institutions that have no federal or private insurance. ``Federal
Deposit Insurance Act: FTC Best Among Candidates to Enforce Consumer
Protection Provisions,'' GAO-03-971 (Aug. 2003), 6-7. In addition,
the Commission understands that there are a small number of state
banks and savings associations that do not have federal deposit
insurance.
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In response to incidents affecting the safety of deposits at
certain financial institutions lacking federal deposit insurance,
Congress amended the Federal Deposit Insurance Act (FDIA) in 1991
adding Section 43 (12 U.S.C. 1831t), which imposes several requirements
on non-federally insured institutions\6\ and private deposit
[[Page 10845]]
insurers.\7\ In general, Section 43(b), as amended by FSRRA, mandates
that depository institutions lacking federal deposit insurance provide
certain disclosures to consumers.\8\ Specifically, in all periodic
statements, signature cards, passbooks, and share certificates, the
institution must disclose that it does not have federal deposit
insurance and that, if the institution fails, the federal government
does not guarantee that depositors will get their money back
(hereinafter ``required long disclosure''). Moreover, in most
advertising and at deposit windows, principal places of business, and
branches, the institution must disclose that it is not federally
insured (hereinafter ``required short disclosure'').\9\
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\6\ ``Depository institutions'' lacking federal insurance
include credit unions, banks, and savings associations that are not
either: a) insured depository institutions as defined under the
FDIA; or b) insured credit unions as defined in Section 101 of the
Federal Credit Union Act (FCUA) (12 U.S.C. 1752). The FDIA defines
``insured depository institution'' as any bank or savings
association the deposits of which are insured by the FDIC pursuant
to this chapter (12 U.S.C. 1813(c)). The FCUA defines ``insured
credit union'' to mean ``any credit union the member accounts of
which are insured by the National Credit Union Administration.'' (12
U.S.C. 1752).
\7\ Congress passed these amendments as part of FDICIA. See Pub.
L. No. 102-242, 105 Stat. 2236 (1991) (Section 151 of FDICIA,
Subtitle F of Title 1, S. 543). Section 43 was initially designated
as Section 40 of the FDIA. See also S. Rep. No. 167, 102 Cong., 1st
Sess., at 61 (1992).
\8\ The definition of ``depository institution'' in Section
43(f)(2) also includes any entity that, as determined by the FTC,
engages in the business of receiving deposits and could reasonably
be mistaken for a depository institution by the entity's current or
prospective customers (i.e., ``look-alike'' institutions). The
Commission has not identified any ``look-alike'' institutions to
date and does not plan to address the issue in this proceeding. If,
in the future, the Commission or commenters identify ``look-alike''
institutions of concern that are not subject to existing legal
requirements, the FTC may consider whether to develop requirements
for such entities.
\9\ 12 U.S.C. 1831t(b).
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For many years after FDICIA's passage, Congress prohibited the
Commission from using FTC resources to enforce the law's requirements.
In 2003, Congress lifted this prohibition for certain provisions of
FDICIA, including the disclosure provisions of Section 43.\10\
Subsequently, the Commission published an NPRM seeking comments on its
proposed implementation of Section 43 (70 FR 12823 (March 16, 2005)).
In response, the Commission received numerous comments raising serious
concerns with the proposal, and, therefore, indirectly with Section 43.
In October 2006, Congress substantially addressed these concerns by
amending Section 43 as part of FSRRA. These new amendments rendered
significant portions of the Commission's proposed Rule obsolete.
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\10\ Making Appropriations for Agriculture, Rural Development,
Food and Drug Administration, and Related Agencies, for the Fiscal
Year Ending September 30, 2004, and for Other Purposes, H.R. Conf.
Rep. No. 108-401, Cong., 1st Sess., at 88 (2003).
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Accordingly, the Commission now proposes modifications to its
proposed Rule and seeks comments on these changes. The FSRRA amendments
did not alter the basic content of the required disclosures. Section 43
continues to require depository institutions lacking federal deposit
insurance affirmatively to disclose that fact to their depositors or
members. (12 U.S.C. 1831t(b)). The FSRRA amendments did, however, amend
the law to: (1) significantly alter Section 43(b)(3) (12 U.S.C.
1831t(b)(3)), which requires institutions to obtain signed
acknowledgments from depositors related to the lack of federal deposit
insurance; (2) establish specific exemptions to the advertising
disclosure requirements; (3) modify the requirements for disclosures on
periodic statements and account records and at depository locations;
and (4) limit some of the FTC's authority under the law and provide
state regulators with specific enforcement authority. These four
changes are discussed in detail as follows.
First, the FSRRA amendments significantly change the signed
acknowledgement requirements of the law, an issue of concern to many
commenters. Specifically, the amendments allow institutions under
certain circumstances to provide notice to depositors in lieu of
obtaining signed acknowledgments.\11\ For example, the law previously
required institutions to obtain signed acknowledgments from all
customers who became depositors after 1994. Under the amended law,
institutions must obtain signed acknowledgments from anyone who becomes
a depositor after the effective date of FSRRA (October 13, 2006),
except for those who become depositors through the conversion of a
federally insured institution to a non-federally insured institution or
through the merger of a federally insured institution with a non-
federally insured institution. For depositors obtained through a
conversion or merger after October 13, 2006, the institution may obtain
the depositor's signed acknowledgement, or make an attempt to obtain
such an acknowledgment, by sending the consumer a card with the
required long disclosure, a signature line, and instructions for
returning the card to the institution. For current depositors (i.e.,
those who became depositors before October 13, 2006 and have not
submitted an acknowledgement), the institution either must obtain a
signed acknowledgement, or make two attempts to obtain such a signed
acknowledgement, by transmitting the above described card to the
depositor.
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\11\ The acknowledgments and notices must indicate that the
institution is not federally insured and that the federal government
does not guarantee that depositors will recover their money if the
institution fails (see Section 43(b)(3)).
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Second, the FSRRA amendments contain specific exemptions to the
law's disclosure requirements for advertising. In particular, the
required short disclosure (that the institution is not federally
insured) need not appear in any ``sign, document, or other item that
contains the name of the depository institution, its logo, or its
contact information, but only if the sign, document, or item does not
include any information about the institution's products or services or
information otherwise promoting the institution.'' The law also exempts
from the disclosure requirement ``[s]mall utilitarian items [e.g.,
common pens and key chains] that do not mention deposit products or
insurance if inclusion of the notice would be impractical.'' (12 U.S.C.
1831t(b)(2)(B)).
Third, the FSRRA amendments alter the disclosure requirements for
periodic statements, account records, and depository locations. Before
the amendments, Section 43(b)(1) required the long disclosure on ``all
periodic statements of account, on each signature card, and on each
passbook, certificate of deposit, or similar instrument evidencing a
deposit.'' The amended provision eliminates the reference to ``similar
instrument evidencing a deposit'' and replaces it with ``share
certificate.'' In addition, before the FSRRA amendments, the statute
required such notices ``at each place where deposits are normally
received.'' The FSRRA amendments changed the law to require affected
institutions to clearly and conspicuously disclose that the institution
is not federally insured ``at each station or window place where
deposits are normally received, its principal place of business and all
its branches where it accepts deposits or opens accounts (excluding
automated teller machines or point of sale terminals), and on its main
Internet page . . . .'' (12 U.S.C. 1831t(b)(2)(A)).
Finally, the FSRRA amendments eliminate the ``shut-down'' provision
of the law\12\ and limit the FTC's authority
[[Page 10846]]
to the promulgation of regulations and the enforcement of the law's
disclosure requirements (12 U.S.C. 1831t(b), (c), & (e)). The
amendments also provide state regulators with broad authority to
enforce all provisions of Section 43, as amended (see 13 U.S.C.
1831(f)(2)).
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\12\ The ``shut-down'' provision, formerly Section 43(e),
prohibited depository institutions lacking federal deposit insurance
from using the mails or other instrumentalities of interstate
commerce to facilitate depository activities unless the appropriate
state supervisor had determined that the institution met eligibility
requirements for such insurance.
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II. Proposed Amendments and Comment Analysis
The disclosure requirements in Section 43, as amended by FSRRA,
currently apply to covered institutions. As directed by Section 43,\13\
however, the Commission plans to issue regulations that track those
statutory disclosure requirements. As part of that effort and to
conform the proposed Rule to the FSRRA amendments, we seek comment on
changes to the proposed Rule published on March 16, 2005 (70 FR
12823).\14\ Specifically, the changes address disclosure requirements
for periodic statements and account records, advertising, and locations
that receive deposits; signed acknowledgment requirements; and an
exception to these requirements for certain depository institutions.
Three sections of the revised proposed Rule simply adopt FSRRA's new
provisions relating to signed acknowledgments (Section 320.5); the
specific advertising disclosure exemptions (Section 320.4); and the
disclosure requirements applicable to periodic statements and account
records and depository locations (Sections 320.3 and 320.4).\15\ There
are, however, a few rule revisions that require further explanation,
specifically, which depository locations are covered by the Rule, the
proposed exceptions for institutions not receiving retail deposits, and
the format and size requirements for disclosures.
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\13\ 12 U.S.C. 1831t(c) & (d).
\14\ The Commission does not propose to revise Sections 320.1
(Scope); 320.2 (Definitions); 320.6 (Exception for Certain
Depository Institutions); and 320.7 (Enforcement) of the 2005
proposed Rule.
\15\ These particular FSRRA amendments, summarized in Section I
of this Notice, and the revised proposed Rule provisions that relate
to them, are straightforward and do not warrant additional
discussion here.
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A. Depository Locations - ATMs, Service Centers, and Shared Facilities
Issue and Comments: The Commission's 2005 proposed Rule would have
required disclosures regarding the lack of federal deposit insurance at
each location ``where the depository institution's account funds or
deposits are normally received including, but not limited to, its
principal place of business, its branches, its automated teller
machines, and credit union centers, service centers, or branches
servicing more than one credit union or institution.'' Many credit
unions commented that the disclosures should not be required at shared
facilities and service centers. They explained that, among other
things, postings required by the National Credit Union Administration
(NCUA) alert consumers that some participating institutions are
federally insured and that others are not (presumably because the
absence of NCUA postings for a particular institution will imply that
the institution lacks federal insurance).\16\ Additionally, American
Share Insurance (ASI) (146)) suggested that the FTC may not
have jurisdiction over the shared facilities because some of these
facilities are housed in federally insured institutions and are not
owned or operated by the privately insured institutions subject to
FDICIA's disclosure requirements. On the other hand, some comments\17\
urged the Commission to require signage at shared branch locations
disclosing the names of all non-federally insured institutions
operating on the premises. Finally, the American Bankers Association
(2) urged the FTC to adopt the definition of service facility
in NCUA's regulations, presumably to provide consistency in the
application of the disclosure requirements.\18\
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\16\ See, e.g., California and Nevada Credit Union League
(128); Greater Cincinnati Credit Union (81); and
Elkhart County Bureau Credit Union (123). See (http://www.ftc.gov/os/comments/FDICIA/index.shtm).
\17\ North Shore Gas Credit Union (105) and America's
Community Bankers (130).
\18\ NCUA defines ``service facility'' as a place where shares
are accepted for members' accounts, loan applications are accepted,
or loans are disbursed. See, e.g., 71 FR 36667 (June 28, 2006).
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Discussion: Pursuant to the FSRRA amendments, the revised proposed
Rule (Section 320.4) would require covered depository institutions to
place the short disclosure ``at each station or window where deposits
are normally received, its principal place of business and all its
branches where it accepts deposits or opens accounts (excluding
automated teller machines or point of sale terminals), and on its main
Internet page . . . .'' This proposed provision simply restates the
language of Section 43, as amended. Accordingly, the revised proposed
Rule would require disclosures at credit union centers and service
centers to the extent they contain stations or windows ``where deposits
are normally received.'' The statutory language does not give the FTC
the flexibility to exempt such locations from the requirement to
disclose that the institution is not federally insured. We do not
expect that such a disclosure at shared facilities would cause
confusion or contradict existing disclosures required by the NCUA. To
the contrary, it would appear the FDICIA disclosure, coupled with the
NCUA disclosures, would help to clarify which participating
institutions are federally insured and which are not. In addition, the
fact that the shared facility itself may not be owned by the uninsured
or privately insured institution or may not be subject to FTC
jurisdiction does not control the ability of the institution itself to
ensure that the disclosures are made. For example, depository
institutions could arrange for the posting of the required disclosure
through their contract with the shared facility.
B. Exceptions For Institutions Not Receiving Retail Deposits
Issue: Section 43(d) of the FDIA (``Exceptions for institutions not
receiving retail deposits'') provided the Commission with discretion to
except certain institutions from the disclosure requirements,
specifically, depository institutions that do not receive initial
deposits of less than $100,000 from individuals who are citizens or
residents of the U.S. (other ``than money received in connection with
any draft or similar instrument issued to transmit money''). The
Commission's 2005 proposed Rule contained such an exception.\19\ In
proposing the provision, the Commission reasoned that customers of
institutions that handle only initial deposits of $100,000 or more are
sufficiently sophisticated that they do not need the same disclosures
as other customers.
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\19\ See 70 FR 12823, 12825 (March 16, 2005). The statute
indicates that the FTC should not consider ``money received in
connection with any draft or similar instrument issued to transmit
money'' to be a deposit for the purposes of this exemption.
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Comments: In response to the Commission's 2005 proposed Rule, the
National Association of Federal Credit Unions (NAFCU) (121)
and the Greater Cincinnati Credit Union (81) opposed the
proposed exception. According to NAFCU, some customers with initial
deposits over the standard maximum insurance amount at federal credit
unions do not understand how their funds are insured. Also, NAFCU
expressed concern that consumers making an initial deposit of more than
$100,000 at institutions covered by the exception may mistakenly assume
that the first $100,000 is federally insured. Conversely, the Navy
Federal Credit Union (83) supported the proposed exception.
Finally, the Comptroller of the Currency (OCC) (201) urged
the Commission to except from the disclosure requirements uninsured
[[Page 10847]]
federally-chartered branches of foreign banks in the U.S. and uninsured
national trust banks. The OCC explained that the proposed disclosure
requirements substantially overlap with existing FDIC and OCC
disclosure regulations for Federal branches of foreign banks and that
Congress ``evidenced no focused or express concern'' about such
institutions.\20\
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\20\ OCC also indicated that national trust banks do not meet
the definition of depository institution in the proposed Rule
because they do not ``receive or hold'' deposits and that such
institutions would fall under the FTC's proposed exceptions for
certain depository institutions that do not receive initial deposits
of less than $100,000.
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Discussion: In 2006, Congress amended the exception language in the
statute by changing the threshold from ``$100,000'' to ``an amount
equal to the standard maximum deposit insurance amount.''\21\ The
Commission's new proposal tracks the 2006 amendment and identifies the
threshold as the ``standard maximum insurance amount.'' The proposed
Rule also defines that term to mean the maximum amount of deposit
insurance as determined under Section 11(a)(1) of the Federal Deposit
Insurance Act (12 U.S.C. 1821(a)(1)). As discussed earlier, the
threshold is currently set at $250,000.
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\21\ Public Law 109-173 (Feb. 26, 2006). The statute now reads:
``The Federal Trade Commission may, by regulation or order, make
exceptions to subsection (b) of this section for any depository
institution that, within the United States, does not receive initial
deposits of less than an amount equal to the standard maximum
deposit insurance amount from individuals who are citizens or
residents of the United States, other than money received in
connection with any draft or similar instrument issued to transmit
money.'' 12 U.S.C. 1831t.
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Because the few comments received were not in agreement on the
exception issue, the Commission seeks further comment on whether such
an exception is appropriate. Among other things, we are interested in
information about whether persons who make deposits of more than the
standard maximum deposit insurance amount understand the insurance
coverage associated with their deposit.
With regard to OCC's concerns about Federal branches of foreign
banks, we have identified no specific basis in the statute to except
institutions that otherwise meet the definition of a depository
institution ``lacking Federal deposit insurance'' as established by
Congress in Section 43(e)(3) (12 U.S.C. 1831t(e)(3)) other than the
non-retail deposit exception proposed at Sec. 320.6.\22\
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\22\ Based on information provided by OCC in its comment,
uninsured national trust banks would not have to follow the
disclosure requirements because they fall under the FTC's proposed
exception (i.e., they ``do not receive initial deposits of less than
the standard maximum deposit insurance amount'').
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C. Format and Type Size Requirements
Issue and Discussion: Consistent with the FSRRA amendments, Section
320.4(b) of the proposed Rule directs institutions to present the
required disclosures ``in such format and in such type size and manner
as to be simple and easy to understand.'' The Commission has considered
proposing prescriptive requirements to implement this provision such as
specific rules for disclosure location and font size. Given the likely
variation in the types and sizes of advertisements, however, the
development of useful, comprehensive, prescriptive requirements appears
unworkable. In addition, prescriptive requirements would deny
institutions the flexibility to make disclosures in the most effective
and efficient way.\23\ Finally, prescriptive requirements could result
in depository institutions incurring greater costs than necessary to
make effective disclosures. Therefore, the Commission is not proposing
prescriptive requirements related to the size and format of the
required disclosures.
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\23\ For general guidance on clear and conspicuous disclosures,
see, e.g., ``Dot Com Disclosures: Information about Online
Advertising,'' Federal Trade Commission, (http://www.ftc.gov/bcp/conline/pubs/buspubs/dotcom/).
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III. Invitation to Comment
The Commission seeks comments on all aspects of the supplemental
notice of proposed rulemaking. All comments should be filed as
prescribed in the ``ADDRESSES'' section above, and must be received on
or before June 5, 2009. In addition to the questions and requests for
comment found throughout this Notice, we also ask that commenters
address the following questions:
(1) What costs or burdens, or other impacts, do the proposed
requirements create, and on whom? What evidence supports the asserted
costs, burdens, or other impacts? Please submit any such evidence.
(2) What modifications, if any, consistent with current law, should
the Commission make to the proposed requirements to increase their
benefits to consumers?
(a) What evidence supports your proposed modifications? Please
submit any such evidence.
(b) How would these modifications affect the costs and benefits of
the proposed requirements for consumers?
(c) How would these modifications affect the costs and benefits of
the proposed requirements for businesses, and in particular, small
businesses?
(3) What modifications, if any, should be made to the proposed
requirements to decrease their burdens on businesses?
(a) What evidence supports your proposed modifications? Please
submit any such evidence.
(b) How would these modifications affect the costs and benefits of
the proposed requirements for consumers?
(c) How would these modifications affect the costs and benefits of
the proposed requirements for businesses, and in particular, small
businesses?
IV. Paperwork Reduction Act
The proposed disclosures and written acknowledgment statements do
not constitute a ``collection of information'' under the Paperwork
Reduction Act of 1995 (44 U.S.C. 3501-3520) because they are a ``public
disclosure of information originally supplied by the government to the
recipient for the purpose of disclosure to the public'' as indicated in
Office of Management and Budget regulations.\24\
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\24\ 5 CFR 1320.3(c)(2).
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V. Regulatory Flexibility Act
For information regarding the Commission's Initial Regulatory
Flexibility Analysis (IRFA) prepared pursuant to the Regulatory
Flexibility Act (RFA), 5 U.S.C. 601-612, commenters should refer to the
Commission's March 16, 2005 NPRM (70 FR 12823).
VI. Communications by Outside Parties to Commissioners or Their
Advisors
Written communications and summaries or transcripts of oral
communications respecting the merits of this proceeding from any
outside party to any Commissioner or Commissioner's advisor will be
placed on the public record. See 16 CFR 1.26(b)(4).
VII. Proposed Rule Language
List of Subjects in 16 CFR Part 320
Credit unions, Depository institutions, Federal Deposit Insurance
Act, Federal Trade Commission Act, and Federal deposit insurance.
0
For the reasons stated in the preamble, the Federal Trade Commission
proposes to add Part 320 to 16 CFR chapter I, subchapter C as set forth
below:
PART 320--DISCLOSURE REQUIREMENTS FOR DEPOSITORY INSTITUTIONS
LACKING FEDERAL DEPOSIT INSURANCE
320.1 Scope
320.2 Definitions
320.3 Disclosures in periodic statements and account records
[[Page 10848]]
320.4 Disclosures in advertising and on the premises
320.5 Disclosure acknowledgment
320.6 Exception for certain depository institutions
320.7 Enforcement
Authority: 12 U.S.C. 1831t; 15 U.S.C. 41 et seq.
Sec. 320.1 Scope.
This part applies to all depository institutions lacking federal
deposit insurance. It requires the disclosure of certain insurance-
related information in periodic statements, account records, locations
where deposits are normally received, and advertising. This part also
requires such depository institutions to obtain a written
acknowledgment from depositors regarding the institution's lack of
federal deposit insurance.
Sec. 320.2 Definitions.
(a) Lacking federal deposit insurance means the depository
institution is not an insured depository institution as defined in 12
U.S.C. 1813(c)(2), or is not an insured credit union as defined in
Section 101 of the Federal Credit Union Act, 12 U.S.C. 1752.
(b) Depository institution means any bank or savings association as
defined under 12 U.S.C. 1813, or any credit union organized and
operated according to the laws of any State, the District of Columbia,
the several territories and possessions of the United States, the
Panama Canal Zone, or the Commonwealth of Puerto Rico, which laws
provide for the organization of credit unions similar in principle and
objectives to federal credit unions.
(c) Standard maximum deposit insurance amount means the maximum
amount of deposit insurance as determined under Section 11(a)(1) of the
Federal Deposit Insurance Act (12 U.S.C. Sec. 1821(a)(1)).
Sec. 320.3 Disclosures in periodic statements and account records.
Depository institutions lacking federal deposit insurance must
include in all periodic statements of account, on each signature card,
and on each passbook, certificate of deposit, or share certificate a
notice disclosing clearly and conspicuously that the institution is not
federally insured, and that if the institution fails, the Federal
Government does not guarantee that depositors will get back their
money. For example, a notice would comply with the requirement if it
conspicuously stated the following: ``[Institution's name] is not
federally insured. If it fails, the Federal Government does not
guarantee that you will get your money back.'' The disclosures required
by this section must be clear and conspicuous and presented in such
format and in such type size and manner as to be simple and easy to
understand.
Sec. 320.4 Disclosures in advertising and on the premises.
(a) Required Disclosures. Depository institutions lacking federal
deposit insurance must include clearly and conspicuously a notice
disclosing that the institution is not federally insured:
(1) At each station or window where deposits are normally received,
its principal place of business and all its branches where it accepts
deposits or opens accounts (excluding automated teller machines or
point of sale terminals), and on its main Internet page; and
(2) In all advertisements except as provided in subsection (c).
(b) Format and Type Size. The disclosures required by this section
must be clear and conspicuous and presented in such format and in such
type size and manner as to be simple and easy to understand.
(c) Exceptions. The following need not include a notice that the
institution is not federally insured:
(1) Any sign, document, or other item that contains the name of the
depository institution, its logo, or its contact information, but only
if the sign, document, or item does not include any information about
the institution's products or services or information otherwise
promoting the institution; and
(2) Small utilitarian items that do not mention deposit products or
insurance if inclusion of the notice would be impractical.
Sec. 320.5 Disclosure acknowledgment.
(a) New Depositors Obtained Other Than Through a Conversion or
Merger. With respect to any depositor who was not a depositor at the
depository institution before October 13, 2006, and who is not a
depositor as described in paragraph (b) of this section, any depository
institution lacking federal deposit insurance may receive any deposit
for the account of such depositor only if the institution has obtained
the depositor's signed written acknowledgement that:
(1) The institution is not federally insured; and
(2) If the institution fails, the Federal Government does not
guarantee that the depositor will get back the depositor's money.
(b) New Depositors Obtained Through a Conversion or Merger. With
respect to a depositor at a federally insured depository institution
that converts to, or merges into, a depository institution lacking
federal insurance after October 13, 2006, any depository institution
lacking federal deposit insurance may receive any deposit for the
account of such depositor only if:
(1) The institution has obtained the depositor's signed written
acknowledgement described in paragraph (a) of this section; or
(2) The institution makes an attempt, sent by mail no later than 45
days after the effective date of the conversion or merger, to obtain
the acknowledgment. In making such an attempt, the institution must
transmit to each depositor who has not signed and returned a written
acknowledgement described in paragraph (a) of this section:
(i) A conspicuous card containing the information described in
paragraphs (a)(1) and (a)(2) of this section, and a line for the
signature of the depositor; and
(ii) Accompanying materials requesting the depositor to sign the
card, and return the signed card to the institution.
(c) Current Depositors. Any depository institution lacking federal
deposit insurance may receive any deposit after October 13, 2006 for
the account of any depositor who was a depositor on that date only if:
(1) The depositor has signed a written acknowledgement described in
paragraph (a) of this section; or
(2) The institution has transmitted to each depositor who was a
depositor before October 13, 2006, and has not signed a written
acknowledgement described in paragraph (a) of this section:
(i) A conspicuous card containing the information described in
paragraphs (a)(1) and (a)(2) of this section, and a line for the
signature of the depositor; and
(ii) Accompanying materials requesting that the depositor sign the
card, and return the signed card to the institution.
Note to paragraph (c): The institution must make the transmission
described in paragraph (c)(2) of this section via mail not later than
three months after October 13, 2006 and must make a second identical
transmission via mail not less than 30 days, and not more than three
months, after the first transmission to the depositor in accordance
with paragraph (c)(2), if the institution has not, by the date of such
mailing, received from the depositor a card referred to in paragraph
(c)(1) of this section which has been signed by the depositor.
(d) Format and Type Size. The disclosures required by this section
must be clear and conspicuous and
[[Page 10849]]
presented in such format and in such type size and manner as to be
simple and easy to understand.
Sec. 320.6 Exception for certain depository institutions.
The requirements of this part do not apply to any depository
institution lacking federal deposit insurance and located within the
United States that does not receive initial deposits of less than an
amount equal to the standard maximum deposit insurance amount from
individuals who are citizens or residents of the United States, other
than money received in connection with any draft or similar instrument
issued to transmit money.
Sec. 320.7 Enforcement.
Compliance with the requirements of this part shall be enforced
under the Federal Trade Commission Act, 15 U.S.C. 41 et seq.
By direction of the Commission.
Donald S. Clark,
Secretary,
[FR Doc. E9-5305 Filed 3-12-09: 8:45 am]
BILLING CODE 6750-01-S